I am fascinated by the massive growth in mobile phone penetration globally. This must be one of the biggest social changes that humans were ever submitted to. I am sure that this social phenomena, will eventually impact the way that we trade and pay as well. This is what I am writing about. See disclaimer at the bottom of blog.

Wednesday, August 12, 2009

The next step for the USAA iPhone check application

My previous post on the USAA iPhone application was extremely popular. I suddenly had much more visits to my blogpage, which implied that I have a lot of US readers (thank you), or this check imaging system is really groundbreaking...

I have not used a check (nor seen one) for years (I do all of my payments electronically), so I had to do some thinking to get my head around what the application actually do. My recollection is that a check is a paper instruction to my bank to pay money into the bank account of the beneficiary. Typically, I would give the check to the beneficiary that passes it on to his/her bank and then this bank passes it on to my bank. Ultimately the check lands up at my bank where the money is duly subtracted from my account and paid over to another bank. It seems in the US it is now possible to pass an image of the check from bank to bank, rather than the physical check itself. And this is possible because we now have technology that is powerful enough to replicate the physical process exactly.

Surely, one should use technology to improve, rather than replicate the manual process? The obvious (and simple) application would be for me (rather than getting the beneficiary and his/her bank to do it), to pass the image of my own check to my own bank, instructing them to pay the money over to the beneficiary. As an even more bold step, we could remove the image and just ask my bank (electronically), using my iPhone to subtract the money and pay the money into the account of the beneficiary.

What you're describing here sounds like a direct transfer of funds from the payor to the payee's bank.

Arguably, an advantage of checks is that they can be transferred to one or several payees without being deposited with each individual's.

This seems to be a function of the check as a paper instrument that can be exchanged several times without being deposited at a bank, and be ultimately payable with its final holder from the account of the original issuer.

What would be the m-banking equivalent of an instrument that was secure and transferable among multiple payees without involvement of the bank of each intermediary holder?

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This is my personal blog. It is not my intention to distribute news that is available elsewhere, but rather comment on it or provide the reader with my own thoughts. Unless otherwise stated, the views expressed on this blog are mine alone. I expressly disclaim any and all liability of any kind or nature with respect to any act or omission based wholly or in part in reliance on anything contained on this blog. Any links that appear on this blog are purely for your information. I'm not making any representations as to their content or, in fact, any other matter concerning them. Follow all links at your own risk.